Good afternoon. This is the chorus call conference operator. Welcome, and thank you for joining the Rai Way First Quarter 2024 Results Analyst Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Andrea Moretti, Head of IR of Rai Way. Please go ahead, sir.
Thank you, operator. Good afternoon, and welcome to all of you today to our first quarter results presentation. As you remember, just a few weeks ago, we held an extensive and comprehensive call on the new industrial plan. So we will keep this presentation relatively short, dedicating the last part of it to our, to your questions as usual. Today's speakers will be our CEO, Roberto Cecatto, the CFO, Adalberto Pellegrino, and Giancarlo Benucci, our Chief Corporate Development Officer. Let me therefore hand the call over to Mr. Cecatto. Please go ahead.
Thank you, Andrea, and good afternoon to everyone. As usual, I will briefly comment on the main highlights of the period listed on page three, while Adalberto will run you through the details of our financial performance immediately after. Starting with the results, which you will also find summarized on slide four, the trends and drivers observed in the first quarter are fully in line with expectation. In particular, at the revenues level, while waiting for the contribution of the new ongoing development initiatives, both on traditional business and diversification areas, we continue to maintain an inertial CPI plus growth profile. On top of it, the plus mainly comes from the full contribution of regional frequencies in the media distribution area and the good dynamics of radio broadcaster and fixed wireless operators in our infrastructure tower hosting business.
This growth is amplified by adjusted EBITDA level, closing at 5.3%, thanks to the usual operating leverage, a benefit on personnel costs related to higher capitalization, and a healthy reduction across all the other cost items. In turn, the EBITDA growth is able to absorb the higher depreciation resulting from the intense investment activity of recent years, as well as the effect of rising interest rates on financial expenses, providing a slightly increasing net income. Investment remained typically limited in the first quarter and on the level comparable to the last year. Numbers are small, but the breakdown of the development component clearly show the growing importance of the diversification initiatives. In the quarter, with no dividend payment, low CapEx, and low maintenance activity, free cash flow generation is typically high, bringing the net debt at around EUR 90 million.
Financial aside, as you know, at the end of March, we defined and approved the strategic guidelines and targets for the next four years, with path, initiatives, and priorities that have been welcomed and appreciated by the market. Immediately after, the focus has been moved to the implementation, with activities carried out along the way shared with you. Just in the last few days, we have been holding internal meetings on how the various initiatives have been set up operationally and the state of the art. Today, there is no particular evidence to report to you. In terms of expectation, the recently issued guidance for the full year is, of course, confirmed, and I will recap in a while the main moving parts. Please, Adalberto, the floor is now yours. Thanks.
Thank you, Roberto. Let's start by taking a closer look at the core revenues on page five. In our slide, total revenue, you may see, it grow 1.5% in the quarter, reaching EUR 68.9 million in the first three months of the year. The growth rate is double the 2023 CPI rate that is benefiting on our top line, thanks to our past initiatives, both dedicated to the broadcasting network, in particular, that you should, you may recall the refarming of frequencies at local level, both the expansion of our tower hosting business. You can see that in the chart on the top of the slide, we show the new revenue breakdown. We choose to represent Rai Way business, also consistently with the view we disclosed in our industrial plan presentation.
The media distribution segment, which includes revenues from Rai, grows 1.2% in the quarter, benefiting from the inflation indexing of our underlying contracts, as well as from the full effect related to the mentioned regional DTT networks. The digital infrastructure revenues, currently fully generated by tower hosting services, increased by 4.1%, mainly thanks to the already mentioned positive trend of business with the fixed wireless access player and radio broadcaster operators. We also keep on providing the traditional breakdown that shows Rai representing approximately 84% of the total revenues in the quarter and growing slightly more than CPI. That clearly underlines how past and current efforts to expand our customer base and outreach paid out. Slide six.
On this slide, you can appreciate the good trend of our cost base, thanks to our cost control actions, especially regarding other operating costs, as well as of an increased amount of capitalized component of the personnel cost. From a reporting point of view, other operating costs are down 5.7%, reaching EUR 10.5 million. Excluding non-core item, we save more than 7% quarter-over-quarter. An important driver of this performance is energy. In the first quarter of last year, electricity tariffs were still significantly high, as you may recall, and even if tax credits granted by the state were still in place, they could not totally offset the higher cost. As a consequence, in Q1 2024, we register an 8% decrease of the total energy cost.
As concerned, the personnel costs, they are reported down by 6.6%, also because we dedicated more working hours to development projects, bringing those costs to be capitalized. Net of this, net of this impact, as well as of non-core items, personnel cost is increasing by approximately 2%. We can now go to slide seven. We recap, as usual, the profit and loss, showing how the operating leverage pushed the EBITDA, both adjusted and non-adjusted, by more than 5%. Also, thanks to the already commented reduction in the overall cost, the EBITDA margin reached a very high level of 68%, compared to last year, 65.5%.
The performance allow us to compensate the 7% higher EBITDA cost connected to growing CapEx, developing CapEx, and financial charges that are double prior year's level due to an interest rate cap that was in place till the end of 2023, with a positive impact on the interest expenses recorded in the previous year. Tax rate is slightly above 2023 figures, reaching 28.8%, because last year figures were impacted by the mentioned tax credit on the energy cost that did not have any impact on the fiscal result. As a result of the trends I've just highlighted, net income rises by 1.4%, reaching almost EUR 24 million. Let's finally move to slide nine, where our financial performance is represented.
You all know that in the first quarter of the year, Rai Way typically generate cash, because the dividend outflow take place in May and because the CapEx activity is relatively weak. This quarter is perfectly in line with this trend, showing CapEx of EUR 5.5 million, slightly lower than last year, mostly dedicated again to development. And also considering another typical absorption, fourteen million EUR at working capital level, the net debt at the end of March stands at EUR 90.6 million, compared to EUR 104, EUR 105, almost EUR 105 million at the end of 2023, and brings the leverage ratio to 0.5 times. In the upcoming months, we will pay, as you know, our dividend and accelerate investment, leading to a planned increase of our net debt.
It's time now to leave the floor again to Roberto for guidance and final consideration. Please, Roberto.
Thanks, Adalberto. Let me now conclude with the expectation for the full year recapped on slide nine. As anticipated in the opening remarks, considering drivers and performance on the first quarter, we reiterate the guidance shared in March. Specifically, first, CPI, second, full impact of regional refarming, and third items, first contribution from DAB driving the growth of adjusted EBITDA compared to 2023, although limited by new infrastructure costs and lack of energy tax credits, only partially offset by reduction of other OpEx.
On the CapEx side, maintenance CapEx on sales ratio is expected slightly above the recurring normalized level of 6.5%, due to extraordinary renovation of some towers. On the other hand, the development component is expected in line with the 2023 level, with the larger majority related to diversification and other third party or internal projects. Considering the EUR 2.4 million EBITDA increase reported in the first quarter, this guidance may look a little bit conservative, but our suggestion is not to simply extrapolate the first quarter performance for the full year, considering that.
First quarter 2024 has been favorably impacted by the level of capitalized personnel, and for the coming quarters, we expect high level of energy costs compared to 2023, based on current power features, and rising startup costs of diversification initiatives that just in this period are in the hot starting phase. Let me say that is all on our side. We can now open the line for the Q&A. Thanks.
This is the chorus call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Giorgio Tavolini of Intermonte. Please go ahead.
Hi, good evening. Thanks for taking my questions. I was wondering, looking at the OpEx trend in this quarter, there was a sizable capitalization of personal costs, EUR 1.1 million extra, compared to last year. So I was wondering if it's something to cure also in the next quarters, and if you can provide, let's say, a sort of guidance for this year in, I mean, this contribute a bit on the EBITDA growth. So, I was wondering what is ballpark estimate for this year? The second question is on the startup costs related to the diversification initiatives. In Q1, you had EUR 400,000 mainly on personnel.
So, I was wondering what kind of cost for personnel, so a new hiring for edge data center, I don't know. And secondly, if you had initial revenues, even though very, let's say, not meaningful, let's say, or only costs in this quarter. Thank you.
So in terms of revenues, we should expect an impact in the second half. As concerns our personnel, we expect to grow in the next quarter because now we are at a very low level, and we already have on top of the area that is in charge of all the data center activities, a team that is working on the initiatives. But for sure, in the context of the launch of the services, we are planning to increase our workforce, especially on that area. And as concerns the capitalized cost, well, we have to consider, probably last year, the first quarter last year was, we reached a very low level, probably the lowest level of capitalized cost.
If you look at the previous quarter, the overall amount was on average between 800 and 900 thousand EUR per quarter. So, from one side, we have to consider that we had last year a very low level. On the other side, we are a little bit higher than the figures recorded in the, let me say, normalized quarter. And in terms of overall figures, even if with a different distribution over the quarter, we expect to be consistently in line with the yearly figures recorded last year.
Many thanks. Just a follow-up, not follow-up, an additional question, if I may. Talking about the elephant in the room, we read in the newspapers about the, on the one hand, the government is working on the new decree, allowing RAI to reduce its stake even below 30%. On the other hand, everyone has now appointed advisor to work on the consolidation deal. So I was wondering if there are real update on this story. Thank you.
Hi, let me say that I could answer on matter regarding our sites. Let me say that, in the recent months, in the recent weeks, also, with our advisor that we appointed, as you know, just before the presentation of the industrial plan, we have continued to work on the matter also, because, as you have seen, it is an important area of development in our plan. So the commitment on this matter can only be consistent. To date, however, there are no relevant updates to share.
Many thanks.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Stefano Gamberini of Equita. Please go ahead.
Good afternoon, everybody, and thanks for taking my questions. Just, if you can also, give us some, color about, what is happening on the hyperscale data center. What I mean is, there are, recently lot of, articles, regarding the fact that, Italy could be an area where, a lot of investors should arrive, on this, side. So are you experiencing more interest, mainly regarding, possible clients, and, regarding, the, hyperscale data center, come on stream? And the same question regarding, edge data center. Do you have also, on this side, some novelties to share with that, mainly regarding both the interest, and also the, trend of, installment of the first, equipment? Many thanks.
Ciao, Stefano. Yeah, you are right. The interest for this business in Italy in particular is rising. As you know, in other parts of the world is a more mature market, but in Italy, we also said that we have a long way to go. Having said that, let me say that on the edge component, although for contract finalization, we prefer to get as close as possible to the real delivery of the assets, what we can say is that there are discussions with various prospects, of course, at different stages, depending on the prospect, but there are, let me say, a decent amount of capacity, and so revenues under discussion as of today.
On the hyperscale side, I mean, the interest for the area of Rome is rising. On that front, it's a little bit too early to engage seriously in real commercial discussions. Obviously, there are discussions, general discussions with customers. What we can say on that front is that regarding the authorization process. The service concession, there is the process in which the various relevant authorities are involved, is going forward. We have received some requests for clarification. That is normal, and that our consultants and designers are working on. But I will say that, as of today, there is nothing material to report.
The support of the municipality is fully confirmed, and as is the goal to obtaining permits within the year.
Thanks, Giorgio.
Gentlemen, there are no more questions registered at this time.
It's fine. So we thank you, everybody, for attending the call, which is over, but we are always available for follow-up. Thank you, and we wish you a nice weekend.